The Federal Energy Regulatory Commission (people call it FERC) just took an important step toward opening up a wholesale market for energy storage. This is big, awesome news. Let’s get into it.
What’s the FERC again?
The FERC is a commission that is in charge of power transmission and wholesale markets across the nation. They get to make new rules and regulations that have a huge affect on the way energy and finances work together through all 50 states. The FERC is an independent government agency, and it’s officially party of the Department of Energy. Their job is to protect the public, and stand up for energy customers, making sure that energy companies are doing their share and following the law.
The FERC is responsible for regulating the transmission of natural gas, oil, and electricity, and regulating the wholesale sale of electricity (even though individual states regulate the retail side of things.)
The five commissioners that make up the FERC have a huge job, especially since renewables like solar and residential energy storage are changing the way energy is generated and transmitted worldwide. Their most recent proposal shows that they are taking this job very seriously.
What are the details of the proposal?
November’s proposal is seriously good news for home battery owners. The new rule FERC wants to put into place would require each regional transmission organization, as well as every independent system operator, to make it possible for energy storage to participate in wholesale markets. If the rule is approved, the role of energy storage in the wholesale market could become very big, very fast. This would also mean some major growth in the energy storage industry itself. Up to this point, energy storage has been relegated to a few areas that passed policies enabling it.
What does this mean, exactly?
The new rule that FERC proposed would require that energy storage is recognized for all that it is: a mechanism that is both a load and a generator, and that can operate within the energy grid in a lot of different ways.
Ever wonder why energy storage has totally taken off in California? It’s because the state already allows energy storage compete in the markets. If the FERC is successful in requiring all states to follow suit, the energy storage market could see the same huge success that it has seen in California. Instead of being cornered into a few choice areas of the country, the energy storage industry could go nationwide.
“This isn’t just clarifying existing rules; it’s redefining the rules to acknowledge the fact that energy storage cannot adequately participate right now and changing the rules to accommodate it,” said Daniel Finn-Foley of GTM Research. “It’s a really big deal.”
How fast will the energy storage market grow?
Much faster than predicted. The FERC proposal could accelerate energy storage integration far beyond its current predicted trajectory. There are a few other factors, however.
First, President-elect Donald Trump has the opportunity to appoint two new commissioners to the FERC. Though the commission is only allowed to have three of the five spots occupied by members of the same party in order to ensure that no political party takes total control, we can expect that there will be a conservative majority in the commission after Mr. Trump takes office.
Second, local decisions will also have an impact on how storage will get to participate in the markets. Though the FERC proposal will put into place certain stipulations, implementation matters. Each Independent System Operator (ISO) and Regional Transmission Organization (RTO) will get to make certain decisions as to how the FERC regulations go down in their area. It’s hard to predict how it will play out, specifically.
Last, the FERC proposal hasn’t been accepted yet, and it’s possible that it will undergo important changes before it does. We’ll keep our finger on the pulse of the FERC, and make sure we update you on any new information about this proposal, and new appointees.
Here’s what we’re looking forward to:
We’re excited about breaking down the barriers that energy storage, particularly smaller, residential home batteries, have faced when trying to participate in the market. It’s about time that homeowners are able to really take advantage of home battery ownership, monetizing the energy they generate, storage, and release back into the grid. This resource is more valuable than ISOs and RTOs have previously recognized. It’s time to put more power… and profit... in the hands of the homeowner.